Fitbit Strives to Escape the Shadow of Apple

SAN FRANCISCO — Earlier this year, Fitbit invited guests to a Las Vegas hotel to witness something that it promised would “ignite the world of health and fitness.”

The event, held during the International CES in January, was intended to make a splash for the wearable tech company’s new product, the Blaze, a $200 smartwatch that measures a wearer’s steps, heart rate and sleep.

The watch got a lot of attention that day — but not all for the better. The term “Fitbit Blaze” became one of the most talked-about topics on Facebook and Twitter, but some people were comparing the device, unfavorably, to the Apple Watch. Many reviews of the gadget later made the same Apple comparison. Fitbit’s stock tumbled more than 12 percent that day.

“I was going in thinking, ‘This is going to be awesome,’” James Park, Fitbit’s chief executive, said of the Blaze introduction in an interview last month. “I was definitely pretty surprised when I looked at some of the aftermath of it.”

The reaction to the Blaze encapsulates the predicament facing Fitbit, the young company that has been a leader in wearable technology: In many people’s eyes, it lives in the shadow of Apple, the Silicon Valley behemoth whose touch-screen smartwatch could potentially stomp its smaller rival out of existence.

This even though Fitbit has been trying to do everything right — and has largely succeeded.

Fitbit, which went public last year, has been increasing revenue at a rate of more than 90 percent as sales of its fitness trackers soar. Last year, Fitbit sold 21.3 million devices, almost double the 10.9 million it sold in 2014. Fitbit, scheduled to report earnings on Wednesday, is also the world’s largest maker of wearable devices by market share, according to the research firm IDC.

Yet the fact that Fitbit’s products focus on one thing — tracking your fitness — is not helping the company’s image in this era of Swiss Army knife devices, where products like the iPhone and Apple Watch can do multiple things. History has been unkind to single-purpose gadgets, many of which have flopped, like Cisco’s Flip camcorder, or have struggled, like the action camera from GoPro.

Competing with Apple, whose cash hoard exceeds the size of many countries’ gross domestic product, is also not easy. Although Apple last week reported its firstsales declineever in iPhones, Apple Watch sales appear to be growing. Apple does not break out sales of the watch, but analysts estimate it has sold 12 million of them since the product’s April 2015 debut.

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The Fitbit Blaze.

As a result, Fitbit’s stock has fallen about 10 percent since it went public last June. “There were concerns around competition, particularly from Apple,” Katy Huberty, an analyst at Morgan Stanley, said of investor skepticism around Fitbit.

Mr. Park said “it actually does not bother me at all” when people frequently compare his company to Apple. He said the Apple Watch serves a different market than Fitbit’s $60 to $250 accessories that focus on health monitoring.

Fitbit purposely took the opposite approach from Apple Watch, he added. The strategy was to begin with simple devices, to make wearables more approachable, and carefully layer on more features over time. In contrast, the Apple Watch started out doing a bit of everything: showing notifications, tracking fitness statistics and making phone calls.

“We look at it from a consumer point of view,” Mr. Park said. Apple Watch “is a computing platform, but that’s really the wrong way to approach this category from the very beginning.”

An Apple spokeswoman did not respond to requests for comment.

Indisputably, Fitbit is growing, both in staff and sales. At the company’s San Francisco headquarters, a timeline on the wall in the fifth-floor hallway illustrates the firm’s history. In 2007, when Mr. Park, a Harvard dropout who had worked on photo-sharing software, founded Fitbit with his business partner Eric N. Friedman, who is now Fitbit’s chief of technology, the start-up had just two employees. By 2015, it had 1,101.

Inside the offices, furnished in midcentury modern style, employees are constantly shuffling in and out of conference rooms for meetings. On a recent visit, a group of new hires was touring the headquarters.

Still, a concern among investors is whether Fitbit can extract more money from existing customers. Most of its sales are from people who buy Fitbit devices for the first time, not those who upgrade.

In addition, many people may end up leaving their Fitbit devices in a drawer. Of those who bought a Fitbit device in 2015, 28 percent stopped using it by the end of the year, according to the company.

“That means that many people who buy Fitbits don’t use them for long, and presumably aren’t going to buy another Fitbit device,” said Jan Dawson, an independent technology analyst. “They have to constantly find new people to sell Fitbits to, whereas most consumer electronics companies can rely on a good amount of repeat business.”

Addressing some of these concerns falls partly to Woody Scal, Fitbit’s chief business officer, who oversees sales and marketing for the company. Last year, Fitbit acquired FitStar, which makes apps offering video instructions on workouts. The apps charge a monthly subscription fee for access to exercise programs, an example of how Fitbit could eventually collect money from software services.

But it may be a while before FitStar has an impact on Fitbit’s results; earlier last month, the FitStar app was ranked 157th in the health and fitness category of Apple’s App Store, according to App Annie, a research firm. Fitbit said FitStar had accumulated 3.5 million downloads and has a loyal user base.

The big picture for Fitbit, Mr. Scal said, is its evolution into a digital monitoring platform to discover and prevent health problems. Fitbit has teamed up with corporations that offer wellness programs for employees. BP, for example, offers Fitbits to more than 23,000 employees, partly to ensure they are getting enough sleep before they work on oil rigs. Mr. Scal said the data from sleep monitoring, a feature built in to all Fitbit devices, could lead to new health revelations.

“I believe we’ve tracked more nights of sleep than have ever been tracked in the history of man,” he said. “We can actually now compare it to normative data that we have and we can identify irregularities.”

As for Apple, though Mr. Park said he was not bothered by the rival company, it has long been in his sights. When Timothy D. Cook, Apple’s chief executive, introduced the iPhone 4S in 2011, for example, Mr. Park had a realization.

At the time, the new iPhone added a capability to synchronize with wireless accessories using the standard called Bluetooth. Fitbit trackers back then lacked Bluetooth connectivity, but Mr. Park wanted them to be able to synchronize data immediately with the iPhone.

“It could enable a lot of possibilities in terms of real-time feedback,” he said.

So Mr. Park gathered a few top employees into a conference room. They decided to re-engineer the Fitbit products to support the new feature. The decision set product releases back about six months, but the revised devices became best sellers.

Mr. Park said Fitbit was poised to innovate products to stay competitive. Sensors are getting more sophisticated, so he imagined a situation where high-end Fitbit devices could eventually support mobile payments or control smart home products like Internet-connected light bulbs.

Yet the products will stop short of resembling the Apple Watch.

“We’re going to be very careful with how we include these things over time,” Mr. Park said. “I think one of the general knocks against smartwatches is that people still don’t know what they’re good for, so they’ve crammed everything in.”

Correction:

An earlier version of this article misidentified who introduced the iPhone 4S in 2011. It was Timothy Cook, who was the company’s chief executive then, not Steve Jobs.

A version of this article appears in print on , on Page B1 of the New York edition with the headline: No. 1 on the Wrist, but No Respect. Order Reprints | Today’s Paper | Subscribe